Consumers In States Hostile To ACA To Receive Higher Average Rebates Than Residents In States That Support It

By requiring everyone to purchase health insurance coverage in 2014, the Affordable Care Act provides millions of new customers to private health insurers. But the law also guarantees that companies don’t swindle premium dollars away on corporate profits and CEO bonuses. Under the law, insurers have to comply with a new Medical Loss Ratio or MLR, which requires that companies spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, as opposed to administrative spending.

It’s a rule Republicans have sought to repeal and water down — repeatedly — but now, a new report from the Kaiser Family Foundation finds that “consumers and businesses are expected to receive an estimated $1.3 billion by this August in rebates”:

The rebates include $541 million in the large employer market, $377 million in the small business market, and $426 million for those buying insurance on their own. Rebates in the group market will generally be provided to employers, and in some cases be passed on to employees as well.Rebates are expected to go to almost one-third (31%) of consumers in the individual market. Among employers, about one-quarter (28%) of the small group market and 19% of the large group market is projected to receive rebates. The share of consumers in the individual insurance market expected to receive rebates ranges from near zero in several states to as high as 86% in Oklahoma and 92% in Texas.

Interestingly, residents in states that are challenging the constitutionality of the law — and seeking to dilute the MLR regulations — are benefiting the most from the provision. A back-of-the envelope calculation finds that states opposing the ACA received an Average Rebate per Individual Market Enrollee of $35.76 ($21.04 in the small group market), compared to $27.43 ($19.04 in the small group market) for those who aren’t. The states that went before the Supreme Court received a total of $320,082,038 in individual market rebates ($210,713,425 in the small group market).


ThinkProgress intern Zachary Bernstein contributed to this post.